Are You Providing Required Annual Disclosures for Your Health Plan?
There are many laws which require employers to distribute annual notices to their employee benefit plan participants - both retirement and group health plans. The sheer number, variety, and content of these notices may be overwhelming, as is the identification of plans required to distribute each notice. You may already be getting help with this task, but the employer/plan administrator is always ultimately responsible for this important obligation. It’s therefore a good idea to be familiar with these required annual disclosures so that you can ensure compliance. Let’s look at the types of notices you may be required to distribute to your employees each year.
Summary Annual Report
Plans subject to the Employee Retirement Income Security Act (ERISA) which are required to file a Form 5500 series each year (including most health/welfare benefit plans with 100+ participants, but excluding plans maintained by state and local governments and non-electing church plans) must summarize and distribute the information contained in those filings in narrative form, following a standardized format. This must be automatically provided to all participants and retirement plan beneficiaries receiving benefits within 9 months after the end of the plan year or 2 months after the due date for filing Form 5500 (with approved extensions), if later.
Children’s Health Insurance Program Notice (CHIP or CHIPRA)
CHIP offers low-cost health coverage to children whose families do not qualify for Medicaid, but don’t make enough to buy private insurance. Employers (not plan administrators) must automatically distribute to all employees (regardless of health plan enrollment) an annual notice of premium assistance opportunities under Medicaid or CHIP. The CHIP notice must be provided no later than the first day of each plan year. Employers may satisfy this disclosure requirement by including the CHIP notice with their other enrollment or annual notice materials (a separate notice is not required). A model notice is available at Children’s Health Insurance Program Reauthorization Act (CHIPRA) | U.S. Department of Labor (dol.gov).
Newborns’ and Mothers’ Health Protection Act Notice
The Affordable Care Act (ACA) generally requires health plans which provide minimum essential benefits, including insured plans maintained by state and local governments, to provide maternity coverage. In addition, group health plans subject to the Newborns’ and Mothers’ Health Protection Act (NMHPA) must cover at least a 48-hour hospital stay following childbirth (or hospital admission, if later). NMHPA-covered plans must also cover at least a 96-hour hospital stay for Cesarean sections. NMHPA notices are required only in the Summary Plan Description (for self-insured plans subject to the Employee Retirement Income Security Act or ERISA) or in the plan document or notices of plan benefit changes (for state and local government plans). However, fully insured group health plans may be subject to either the NMHPA or applicable state law in states which have adopted laws similar to the NMHPA. In those states, your notice obligations may be different. Your plan administrator or third-party administrator should be able to assist you in determining which law applies to your coverage.
Michelle’s Law Enrollment Notice
Michelle’s Law was enacted in 2008 to ensure that dependent students who take a medically necessary leave of absence do not lose health insurance coverage. While the Affordable Care Act now requires group health plans to continue covering dependents until age 26 regardless of student status, students over age 26 might be entitled to additional coverage of up to one year under Michelle’s Law if they are enrolled in an institution of higher education at the beginning of a medically necessary leave of absence, even if the leave normally would cause the dependent child to lose eligibility for coverage under the plan due to loss of student status. The notice must be provided with any notice of a requirement for certification of student status for coverage under a plan. Like the Wellness Program Disclosure, this is not explicitly an annual disclosure requirement; however, employers often include this in their annual enrollment materials to ensure the requirement is satisfied in the event that those materials describe a student status requirement for children exceeding age 26.
Women’s Health and Cancer Rights Act Annual Notice
The Women’s Health and Cancer Rights Act of 1998 (WHCRA) requires group health plans to provide notice of mastectomy-related reconstructive surgery, prostheses, and treatment of physical complications of mastectomy. The notice must be provided to all plan participants, and must be provided both at initial enrollment and annually thereafter. These notices can be separate or included in open enrollment materials provided to participants.
Mental Health Parity and Addition Equity Act Cost Exemption Disclosure
Under the Mental Health Parity and Addiction Equity Act (MHPAEA), health plans and insurers must generally ensure that there is “parity” between mental health/substance use disorder benefits and medical/surgical benefits. Group health plans may claim exemption from these requirements if they can show that the additional cost resulting from this coverage exceeds a specified percentage of total costs. Plans which claim this exemption must furnish a notice of the plan’s exemption to participants, beneficiaries, the Employee Benefits Security Administration (EBSA) of the Department of Labor, and state regulators. This requirement isn’t explicitly mandated annually, but this is recommended to ensure new participants are aware of the plan’s exemption.
In many cases, state laws also mandate specific levels of mental health/substance abuse coverage and/or benefits for specific conditions. Expert counsel should be consulted to determine if these laws apply to your plan, and if so, what disclosure obligations are mandated by the applicable state law(s).
Disclosure of Grandfathered Plan Status
Grandfathered plans pre-date the enactment of the ACA on March 23, 2010. Plans which do not make certain changes can remain exempt from some ACA market reforms. These include the requirement to cover preventative services at no cost, to provide certain processes related to internal claims and appeals and external review, and patient protections. Once a plan loses grandfathered status, it cannot be regained. This disclosure is only applicable to plans with grandfathered status and should be provided at enrollment with other documents describing the plan.
Summary of Benefits and Coverage and Notice of Modification
Group health plans subject to ACA mandates must distribute a Summary of Benefits and Coverage (SBC) and uniform glossary each year at open enrollment. This easy-to-understand summary is required to follow a uniform format, allowing the participant to easily compare plans. The SBC is most often provided by an insurer or a third party or claims administrator (TPA), but should be carefully reviewed before it is distributed to ensure it correctly reflects your plan’s terms. SBCs must also be distributed upon an individual’s initial enrollment, within 90 days of special enrollment and no more than 7 days after a written request to the plan administrator, and Notice of a Modification must be provided no later than 60 days prior to the effective date of the change.
Notice of Primary Care Provider Designation Requirements
If a non-grandfathered group health plan requires participants to designate a participating primary care provider, the plan or issuer must provide a notice of these patient protections whenever the SPD or similar description of benefits (such as that generally provided at open enrollment) is provided to a participant. If your plan has such a requirement, this notice should be included in the plan’s SPD or other benefit descriptions and in its annual open enrollment materials.
External Review Process Disclosure
Plans which are not grandfathered under the ACA must provide a description of the external claims review process available to participants. States which provide laws with minimum consumer protections may use their own external claims process, while those which do not must use the federal process. This description should be included in the SPD and/or in any other evidence of coverage provided to enrollees, such as the annual “Certificate of Coverage” provided at open enrollment for fully insured plans. There may also be additional notice requirements based on federal or applicable state laws.
Medicare Part D Creditable or Non-Creditable Coverage Notice
Employers which provide prescription drug coverage must determine each year whether that coverage is equivalent to or better than the coverage provided under Medicare Part D. If it is, the covered individual may delay Part D enrollment without future financial penalty.
Each year, sample notices are made available on the Medicare web site, at Model Notice Letters | CMS (www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/Model-Notice-Letters). Employers must distribute the appropriate Creditable or Non-Creditable Coverage Notice no later than October 15th each year to plan participants who are eligible for Medicare Part D; however, as employers may not be aware of covered family members eligible for Medicare Part D, we recommend distributing it to all covered participants (including COBRA beneficiaries).
Employer-Sponsored Health-Contingent Wellness Program Disclosure
Employers maintaining a health-contingent wellness plan must provide notice of a reasonable alternative standard (or possibility of a waiver of the otherwise applicable standard), including contact information for further information about the alternative and a statement that recommendations of an individual’s personal physician will be accommodated. Although this is not specifically an annual requirement, we include it here because details of these plans often change each year, which may require an updated notice, and because many employers have recently adopted or expressed interest in changing plans to incentivize COVID-19 vaccination.
Of course, there are many other disclosure requirements which are not subject to annual mandates, and specific requirements regarding how these notices must be delivered. We’ll cover those in a future blog post.
This blog is up to date as of August 2021 and has not been updated for changes in the law, administration or current events.